Promoting Inclusive Innovation by yurtgc548


									                                                                                           Chapter     4

Promoting Inclusive Innovation
Anuja Utz and Carl Dahlman

A cross-cutting, multipronged strategy is needed to make India’s innovation system
better meet the needs of the common people. Most discussion on India’s innovation
system focuses on formal research and development (R&D) efforts and the formal
part of the economy. However, India is an extremely heterogeneous economy, and
most of its population operates in the informal sector. Given the rising divergence
between productivity in agriculture and in knowledge-intensive professional sectors
such as information and communication technology (ICT) and finance, and the
economy’s inability to sufficiently absorb migrants from the agricultural sector and
new entrants to the labor force, income inequality will likely increase. This has been
the trend in most other economies—especially fast-growing ones. Inequality is also
likely to worsen unless special efforts are made to address the needs of the poor.
    This chapter outlines some mechanisms to support innovation efforts that can
help improve the productivity and livelihoods of people in India’s vast informal
economy. Much of the knowledge and technology needed to achieve the Millennium
Development Goals (MDGs) already exists. Much is known about basic nutri-
tion, sanitation, preventive medicine, environmentally friendly technologies, cheap
mobile phones, and the like. But poor people’s needs are broader than the few listed
and monitored as part of the MDGs, and further innovation is required to improve
delivery of a wide range of public services. Far more needs to be done on preventive
medicine, clean water, education, and other public services that can benefit from
harnessing collaborative efforts of formal creation efforts for the poor. What is
needed is not only to reduce the costs and increase the availability of goods and
services needed by the poor, but more important, to open up sustainable livelihood
and productive income-generating opportunities for the poor.
    Poor people’s innovative ability is constrained by, among other things, insuffi-
ciently developed skills, inadequate public services, and an inability to access markets
and assets on fair terms and handle associated risks. Enhancing skills through better

                                                                       Anuja Utz and Carl Dahlman
          delivery of basic training for the informal sector is discussed in chapter 5. How inno-
          vation through access to new and existing technology can help create more and
          better-paying jobs for enterprises that the poor work in or run has not received
          enough attention, and is a major focus of this chapter. In addition to strengthening
          poor people’s capabilities, solutions will involve strengthening incentives, policies,
          and institutions. Part of the solution will be in stronger institutional infrastructure.
          In addition to closer collaboration between public R&D entities, industry, universi-
          ties, nongovernmental organizations (NGOs), and global networks to better meet the
          needs of the poor, the poor could gain by organizing themselves in groups. In
          Andhra Pradesh, community-based development initiatives have led self-help
          groups to develop mutual insurance schemes, lending and savings operations, and
          marketing strategies for new agricultural products. Although this chapter illustrates
          the potential of new and existing technologies in opening up some of these oppor-
          tunities, a lot more needs to be done.

          Harnessing Formal Creation Efforts for the Poor

          A first approach to promoting inclusive innovation is for India to harness, increase,
          and redirect formal creation efforts to better meet the needs of the economically
          weaker sections of Indian society. The main recommendation of this section is to
          create incentives for pro-poor early-stage technology development (ESTD) and
          commercialization by the formal sector, possibly by providing more preferential
          matching grants to collaborations among public R&D entities, industry, universities,
          NGOs, and global poverty alleviation networks.

          Agricultural R&D as Inspiration

          India’s green revolution is the foremost example of harnessing formal creation
          efforts for achieving national self-sufficiency in food grains. Over the past four
          decades, the green revolution has significantly improved India’s food security and
          reduced rural poverty. It has included investments in technology, largely comprising
          high-yielding seed varieties (initially of wheat and later rice), chemical fertilizers, and
          agricultural research and extension—aided by public investments in supporting
          infrastructure (irrigation, roads, market institutions) and price incentives that have
          encouraged wheat and rice production.
              Although India’s agriculture faces many challenges, it also has great technological
          opportunities. There is huge untapped potential for augmenting value chains in
          agriculture through crop diversification and forward and backward linkages, includ-
          ing post-harvest handling and processing. First, the rich diversity of agro-ecosystems
          is a source of sustainable growth for the sector. Second, joint ventures between pub-
          lic research institutes and the private sector are seen more favorably today. Such part-
          nerships could considerably augment R&D efforts. Third, agriculture can develop
          value chain processing activities in rural areas to meet the changing pattern of food
          demand in the country and to tap international markets. Fourth, crop diversification

Promoting Inclusive Innovation
has become a potential source of agricultural growth, creating new export and
employment opportunities. Fifth, livestock, fishery, and horticulture are emerging as
important sunrise sectors. Because most livestock is owned by small and marginal
farmers and landless households in rural areas, the rapid growth of these sectors
benefits poor households.
    Agricultural R&D is crucial to generating additional income and employment for
the poor. Given the limited scope for expanding agricultural areas, increases in pro-
ductivity, profitability, and competitiveness will be the main sources of agricultural
growth—led or triggered by innovations and applications of science in agriculture. In
other words, Indian agriculture will shift from resource- and input-based growth to
knowledge- and science-based growth. Flows of knowledge and innovations play a
critical role in this paradigm shift. R&D assumes more importance because it is a cost-
effective way of promoting sustainability and increasing competitiveness. To attain
global competitiveness, more attention should be given to harnessing advances in fron-
tier sciences in priority areas. Thus, support for basic and strategic research is critical.
The consortia emerging between research entities and the private sector being pro-
moted by the National Agricultural Innovation Project are a direction worth pursuing.

Building on Public R&D and University-Enabled Initiatives

India’s large, diverse public R&D infrastructure has the potential to address more of
the problems of the poor. As noted in chapter 2, the bulk of India’s public R&D infra-
structure is mission oriented to defense, space, and energy, with much less applied to
problems of agriculture, industry, and health. Much more can be done to orient the
considerable capabilities of this large public research system to address the needs and
problems of the poor. Some of this harnessing is occurring in mission-oriented pro-
grams such as space, and a number of initiatives are under way in biotechnology,
medicine, and industrial R&D (box 4.1).
   The Council of Scientific and Industrial Research’s (CSIR’s) development of tech-
nology applications for rural India is a candidate for expansion, with the need for
greater emphasis on commercialization (CSIR 2004). CSIR has been increasingly
concentrating on a people-oriented development and delivery approach. CSIR labs,
for example, have been instrumental in reviving India’s world-famous handmade
blue pottery, with research leading to product and quality improvements and prod-
uct diversification—enabling this ailing traditional industry to find new life and
extended markets outside India. Another example is technology to desalinate water
using reverse osmosis. CSIR labs have also been designing multichannel ceramic
membrane with optimum channel configuration to upgrade technology for purify-
ing arsenic contamination in groundwater. CSIR has also been working on herbal
products, mint oil (from the Central Institute of Medicinal and Aromatic Plants,
Lucknow), food processing technologies, leather processing technology, and more.
Although it has developed many pro-poor products and technologies, its transfer
and commercialization have been weak.

                                                                                      Anuja Utz and Carl Dahlman

          Box 4.1      Public Research for Development

          Using space technology for development. Advances in space-based Earth observation tech-
          nology and its applications have the potential to integrate diverse sciences to provide economic
          security and better living standards. For example, Sujala, a watershed development project in
          Karnataka, has created hope for 1,270 villages across five districts, relying on high levels of
          community participation and scientific planning tools like satellite remote sensing, geographic
          information systems, and information technology (Muniyappa, Ranganath, and Diwakar 2004).
          Similarly, under the Rajiv Gandhi National Drinking Water Mission, more than 2,000 ground-
          water maps covering about 45 percent of the country (mainly problem zones) have been pre-
          pared, and more than 24,000 wells drilled (Mohandas and Reddy 2004).

          Preventive medicine. The new antituberculosis molecule (LL-4858 Subotern) by Lupin is an
          example of network innovation through a public-private partnership. The Council of Scientific
          and Industrial Research supported this project through the New Millennium Indian Technology
          Leadership Initiative (NMITLI). The molecule has the potential to not only treat tuberculosis
          but also significantly reduce treatment time, and is compatible with combination therapy. The
          molecule has been tested on mice and guinea pigs and has been proven very effective. An
          investigational new drug application has been made. Once cleared, the molecule will go through
          clinical trials (Bowonder and others 2006).

          Source: Authors.

                                 India’s extensive university system can also do more. Except for the Indian Insti-
                             tute of Science and Indian Institutes of Technology (IITs), most Indian universities
                             do little R&D. But they have the bulk of scientists and engineering PhDs, so have
                             considerable intellectual capital that can be deployed to work on the technological
                             problems of the poor. Some good initiatives in this area can be built on (box 4.2).
                                 Stronger incentives and funding are needed to harness the potential of public
                             R&D and university-enabled initiatives. Available mechanisms to increase the focus
                             on inclusive innovation include institutional mandates, prizes and public awards,
                             and targeted funding. As a policy thrust, the government should encourage research
                             institutes, universities, and other publicly funded learning institutes to do more to
                             address the needs of the poor—for example, through competitive research grants.
                             Prizes and public awards could be given to research teams and institutes that pro-
                             duce relevant innovations. Mechanisms—including widespread dissemination and
                             funding—should be offered to scale up, demonstrate, and disseminate these innova-
                             tions to people in the informal sector. The precise nature of transfer and dissemina-
                             tion mechanisms will depend on the nature of the innovations and their potential
                             applicability. Those with the nature of public goods should be widely demonstrated
                             and disseminated among the target population. One possible mechanism would be
                             to create a professional body entrusted with in-field trial and demonstration for dif-
                             fusion, adaptation, and assimilation of formal sector technologies for the poor. Such
Promoting Inclusive Innovation

      Box 4.2      University-Enabled Initiatives

      n-Logue. Incubated at IIT Chennai, n-Logue ( can best be described as an
      Internet service provider for rural areas (Manzar 2005). It was launched to fill the need for Inter-
      net and voice services in underserved small towns and villages; the company does not operate
      in any of India’s top 150 population centers. n-Logue has established 2,500 village information
      kiosks with dedicated broadband connectivity, offering agricultural, health consultation, educa-
      tion, and insurance services. The kiosks have been set up by village entrepreneurs, who take
      bank loans to finance the initial costs. The kiosks must generate revenues to repay the loans.
      The aim is to replicate the Public Call Office model throughout rural India so that it can help dou-
      ble rural per capita income (Das Gupta 2006). The International Finance Corporation’s Grassroots
      Business Initiative is providing a grant to scale up n-Logue’s telemedicine technology for districts
      in Tamil Nadu and Gujarat; it is also exploring e-pharmaceutical distribution. Jhunjhunwala,
      Ramachandran, and Ramachander (2006) find—in joint research conducted by n-Logue and
      Microsoft on 150 kiosks—that while only a few are profitable within 6 months, 60–70 percent
      report profitability within 6–24 months. Because most kiosks are reluctant to report their
      incomes and generally grossly underreport, having 60–70 percent report themselves profitable
      is significant.

      Baluchari IIT Kharagpur computer-aided design (CAD) program. Baluchari is a sari design
      style from West Bengal. Previously only rich people could own such saris, because the
      handloom-based weaving took an average of six months of design. A new adaptation using
      CAD simplified the design by replacing the handloom with the Jacquard loom. The spread of
      the Jacquard loom was affected primarily through a cooperative, while the idea and initiation
      were those of the master weaver. A public research organization and IIT Kharagpur joined with
      the cooperative and secured ministry funding. The CAD program was user friendly, and the coop-
      erative adopted and diffused the process very successfully within Bengal. The program has
      retained the original design style, and varieties are immense. CAD-designed Balucharis are in the
      market at low prices, and the size of the market and earnings of weavers have increased. More
      important, the production process remains household-based, and marketing—including sourcing
      of input materials and financing—remains based on master trader networks (Banerjee 2006).

      Source: Authors.

an entity would hire professionals trained in market research and media planning,
offering competitive compensation.1 Innovations that can be commercialized should
be licensed to qualified producers and organizations.

Encouraging Private Sector and Global Network Initiatives

There is even greater potential to harness the research capacity of the private sector to
address the needs of the poor—as shown by the growing number of Fortune at the
Bottom of the Pyramid initiatives. Efforts to develop products that meet the needs of
                                                                                         Anuja Utz and Carl Dahlman

          Box 4.3     Fortune at the Bottom of the Pyramid Initiatives

          Solar energy for the poor. The Solar Home Systems program, launched as a three-year energy
          pilot in Karnataka by the United Nations Environment Programme and the Shell Foundation,
          works with two major Indian banks and nine agricultural subsidiaries to make loans to rural
          households seeking to buy solar lighting. By September 2005, the program had provided more
          than 100,000 people with reliable, affordable electricity for the first time.
          Mobile telephones. Ultra low-cost handsets are being produced by Nokia and LG, reflecting
          the 5 million new mobile phone connections being added each month in India.
          Simputer. Amida’s Simputer is designed to enable word processing and e-mail, regardless of
          language. Prices for the computer range from $240–480. It was developed for use in rural areas
          and for applications such as microfinance and e-governance.
          Microlending. The SKS smart cards project is a microfinance project catering to marginal farm-
          ers and agricultural workers. SKS Microfinance is an innovative nonbanking financial company
          that has a variety of loan products, encourages membership of women, and provides loans of
          $100 or less. So far it has loaned about $57 million to more than 200,000 people. ICICI Bank has
          lent more than $10 million to SKS and led multiple initiatives to provide affordable banking
          services to the poor. The bank has partnered with SKS, n-Logue (see box 4.2), and others to
          co-locate automated teller machines with rural Internet kiosks. It has also created a network of
          8,000 self-help groups, each with 20 female members, to create microfinanced businesses.
          Hypermarkets and access to cold storage supply chains for poor farmers. Over the
          2007–10 period, Reliance Industries—India’s largest private sector company, an oil, petrochem-
          icals, and textile group—intends to build a nationwide retail network of 2,000 supermarkets and
          1,000 larger hypermarkets based on a distribution supply system, an integrated “farm to fork”
          logistics supply chain. Reliance will not enter the farming business. Instead it will be the “off-
          taker of last resort,” relieving farmers of risk. It plans to revolutionize both farming and retail by
          investing $5.7 billion by 2011 to modernize both farms and stores, connect them through a dis-
          tribution system guided by the latest logistics technology, and create enough surplus to gener-
          ate $20 billion in annual agricultural exports.
          Direct-to-home distribution network. Consumer goods firms such as Hindustan Lever are
          seeking new ways of doing business among the rural poor. Its Project Shakti recruits women
          to self-help groups that offer tiny loans—microcredit—to support a direct-to-home distribution
          network. The project already reaches 80,000 villages, and by 2010 expects to employ 100,000
          “Shakti entrepreneurs,” covering 500,000 villages.
          Low-cost Internet connectivity for poor villages. Indian Tobacco Company’s e-Choupal ini-
          tiative has equipped more than 6,000 villages with computers and satellite connections to the
          Internet—part of its agribusiness procurement network. Farmers can use the computers to
          check prices for their products and sell online, freeing them from middlemen who take a big cut
          of farm earnings. Once a commercially viable way has been found to provide a village with an
          Internet connection, it has many other potential uses, including for e-government, sales, edu-
          cation, and entertainment.


Promoting Inclusive Innovation

      Box 4.3     continued This initiative delivers fee-based e-governance, education, commerce, and
      insurance services to rural populations in northern and northeastern India. These services are
      delivered through more than 700 kiosks owned and operated by local entrepreneurs. The Inter-
      national Finance Corporation’s Grassroots Business Initiative is providing Drishtee with a grant
      to establish 50 new kiosks in Meerut, Uttar Pradesh.
      Sources: Usher 2003; Shell Foundation 2003; Tata 2007; Economist 2005a, 2005b, 2005c, 2006; Sharma 2004;
      Bellman 2006; Prahalad 2004; Moreau and Mazumdar 2006.

the poor and underserved—while also creating viable business propositions—need
to be pursued more systematically. As argued by Prahalad (2004), large companies
can use their considerable technological, organizational, and marketing capabilities
to create and deliver products and services for people at the bottom of the economic
pyramid—those with incomes of less than $2 a day—and make a profit doing so
(box 4.3).2
    Global networks provide another source of formal R&D to meet the needs of
the poor. The best known of international public goods R&D efforts is the Consul-
tative Group for International Agricultural Research (CGIAR), which was behind the
green revolution. There are also major initiatives in medicine and pharmaceuticals,
environment, and other areas in which India should continue to participate, such as
in the Global Research Alliance (box 4.4).
    The government should consider allocating more funds to encourage formal cre-
ation and commercialization efforts that focus on the challenges facing the poor. It
could establish a pilot Inclusive Innovation Fund to support formal R&D by public
R&D entities, the private sector, universities, and NGOs aimed at the needs of the
informal sector, on a matching grant basis. These initiatives should be subject to con-
tinuous monitoring and evaluation. If successful, in the long term the government
should earmark a small percentage of the federal public R&D budget to support an
Inclusive Innovation Fund on a recurring basis—the funding should cover scaling
up, piloting, testing, and taking to the market. Competition for scarce funds would
be driven by transparent eligibility and evaluation criteria.
    Initiatives should focus on the underserved community—the more than 800
million Indians living on less than $2 a day. An additional incentive is that many
solutions developed for poor Indians would also be applicable for the 4–5 billion
poor people worldwide. Thus, firms can develop and pilot in India products and
services that then may be marketed globally. In addition, the government could pro-
vide financial incentives and awards to research teams, institutes, and universities
that produce relevant innovations, as well as dissemination and funding mecha-
nisms to scale up, demonstrate, and disseminate innovations to people in the infor-
mal sector.
                                                                                         Anuja Utz and Carl Dahlman

          Box 4.4      International Public Good–Type Innovation Efforts

          Agriculture. The Consultative Group for International Agricultural Research (CGIAR) is a strate-
          gic alliance of members, partners, and international agricultural centers that mobilizes science
          to benefit the poor. The hope of extending the productivity gains of the green revolution in India
          to other parts of the developing world was in large measure the impetus for the CGIAR. Recent
          achievements include releasing quality protein maize varieties in 25 countries on more than
          600,000 hectares, breeding a selective strain of tilapia, adopting low-till farming practices on
          1.2 million hectares across the Indo-Gangetic plains, and training more than 75,000 developing
          country scientists and researchers.

          Medicine and pharmaceuticals. According to Grace (2005), at $10 billion, India’s pharmaceu-
          tical industry ranks 4th in the world in volume of production and 13th in value. India supplies
          22 percent of the world’s generic drugs and a significant proportion of the vaccines made for
          the developing world. India can take advantage of recent commercial opportunities, such as the
          U.S. President’s Emergency Plan for HIV/AIDS Relief (PEPFAR). Now that the risk to generic
          companies of being sued by originators is gone, companies such as Ranbaxy, Matrix, and
          Aurobindo have taken up the offer to get generic antiretrovirals approved by the U.S. Food and
          Drug Administration under the expedited review process set up to support PEPFAR. India is also
          participating in global initiatives such as the International AIDS Vaccine Initiative (IAVI) and the
          Global Fund to Fight AIDS, Tuberculosis, and Malaria (GFATM). More funding will enable it to
          work on solutions that would benefit not only itself but also the world.

          Global networks. India, through CSIR, is a member of the Global Research Alliance (GRA)—a
          global knowledge pool for global good committed to undertaking large-impact projects for the
          benefit of society.
          Sources: CGIAR (, IAVI (; GFATM (
          Programs/Portfolio.aspx?countryID=IDA&lang=en and
          ane/india_05.pdf); GRA (

                            Promoting and Diffusing Grassroots Innovations

                            A second approach to promoting inclusive innovation is for India to better promote
                            and diffuse innovations by grassroots entrepreneurs. A main recommendation of this
                            section is for grassroots innovation networks to be formally evaluated and supported.

                            Grassroots Innovation Networks

                            Grassroots innovation networks support efforts where traditional knowledge and
                            innovative products emerge at the individual or collective level.3 Grassroots innova-
                            tion programs focus on poverty alleviation programs based on local people’s knowl-
                            edge, innovations, and practices, largely produced and maintained at the grassroots
                            level. In some cases value may be added by the formal science and technology sector,
                            but the lead ideas or traditional knowledge emerge at the local level. The programs
Promoting Inclusive Innovation
Table 4.1 Grassroots Innovations: Activities and Actors

 Activities              Government                       Nongovernment                      Private
 Documenting and         • National Innovation Founda-    • Honey Bee Network (HBN)          • Publications
 disseminating             tion (NIF)                     • Society for Research and Ini-        Eenadu’s
 information             • Department of Science and        tiatives for Sustainable Tech-       Annadata
                           Technology (DST)                 nologies and Institutions            Adike Patrike;
                         • CSIR’s Traditional Knowledge     (SRISTI)                             Malayalam
                           Digital Library (TKDL)         • Foundation for Revitalization        Panorama
                         • Ayurveda Yoga Naturopathy        of Local Health Traditions           Baliraja
                           Unani Siddha and Homeopa-        (FRLHT) Community Biodi-             Prakurthi
                           thy (AYUSH)                      versity Registers (CBRs)
                         • Grassroots Innovation Aug-     • Kalpavriksh
                           mentation Network (GIAN)       • Gene Campaign
                                                          • Beej Bachao Andolan
                                                          • Anthra
 Resource                                                 • FRLHT CBRs
 conservation                                             • Beej Bachao Andolan
 Value addition and      • DST’s Technology Informa-      • SRISTI
 experimentation           tion, Forecasting, and         • Rural Innovation Network
                           Assessment Council (TIFAC)       (RIN)
                         • CSIR                           • Magan Sangrahalaya
                         • NIF                            • Centre for Innovation, Incu-
                         • GIAN                             bation and Entrepreneurship
                                                            (CIIE) at IIM-Ahmadabad
 Commercialization       • CSIR                           • SRISTI                           • Aavishkaar
                         • NIF                            • GIAN
                         • GIAN
 Dissemination           • NIF                            • HBN and network
                                                          • SRISTI
                                                          • Centre of Science for
                                                            Villages (CSV)
 Finance                 • DSIR Techno-entrepreneurs      •   SRISTI                         • Aavishkaar
                           Promotion Program (TePP)       •   RIN
                         • DST Science and Society        •   NIF
                           Program                        •   GIAN
 Intellectual property   • NIF                            • SRISTI
 rights protection
 programs and

Source: Mathur and Sinha 2006.

include a broad range of actors—government, NGOs, and the private sector—
involved in a host of activities (table 4.1). The largest, best-known nongovernment
programs are the Honey Bee Network (HBN) and the Society for Research and
Initiatives for Sustainable Technologies and Institutions (SRISTI). The two largest
government programs are the Grassroots Innovation Augmentation Network
(GIAN) and the National Innovation Foundation (box 4.5). The government has
also set up the Traditional Knowledge Digital Library (TKDL) to prepare a comput-
erized database of indigenous knowledge on medicinal plants.
                                                                                        Anuja Utz and Carl Dahlman

          Box 4.5 Grassroots Innovation Networks: HBN, SRISTI, GIAN, and NIF

          Honey Bee Network (HBN) and Society for Research and Initiatives for Sustainable Tech-
          nologies and Institutions (SRISTI). The HBN consists of innovators (individuals, farmers, and
          entrepreneurs), policy makers, academics, and NGOs committed to recognizing and rewarding
          innovative ideas and traditional knowledge produced at the grassroots level (by individuals and
          communities) through local language interfaces. It seeks to protect the intellectual property
          rights of knowledge holders and follow the conditions they may advise under the concept of
          prior informed consent (PIC). SRISTI ( was created in 1993 as a voluntary organ-
          ization to provide financial and institutional backing to the HBN. SRISTI has organized 17 Shodh
          Yatras (journeys of exploration) and developed a multimedia, multilanguage database using
          graphics, photographs, and other audiovisuals. It manages KnowNet Grin—an electronic
          knowledge network of grassroots innovators, and GILD (Grassroots Green Innovations local
          language database). It has developed a multimedia kiosk node at the IIM-Ahmadabad: Gyan
          Manthan Kendra (GMK), village knowledge churning center to connect innovators across lan-
          guage and cultural barriers. At the international level, SRISTI has organized scouting contests,
          with awards given to grassroots innovators from China, India, and Vietnam. SRISTI has also
          focused on women’s knowledge systems through the Sadbhav-SRISTI Sansodhan Lab—the
          Natural Product Lab. The major products that have been successful in the scheme of value
          addition include development of botanical pesticides and growth promoters and health healing

          Grassroots Innovation Augmentation Network (GIAN). GIAN ( was devel-
          oped in 1997 with seed money from the Gujarat government to link innovations, investment,
          and enterprises so that benefits could be shared widely among the community. GIAN provides
          small amounts of funding for prototype development, facilitates links between innovators and
          scientific and technological institutions, and identifies commercial enterprises interested in
          licensing product technologies from grassroots innovators. GIAN has established the Grass-
          roots Innovations Design Studio (GRIDS) at the National Institute of Design, Ahmadabad, and
          has been recognized as a Scientific and Industrial Research Organization (SIRO) R&D institution
          by the DSIR. About 18 technologies have been licensed and benefits shared with innovators
          under the PIC framework. GIAN has facilitated the development of more than 61 enterprise
          efforts to manufacture and market innovations, and has filed 67 patents and 3 design registra-
          tions; 2 patents and 1 design registration have been granted. It has filed seven patents in the
          United States—three have been granted. A Patent Assistance Cell at GIAN West has been
          established to assist small and medium innovators. GIAN has arranged for micro venture
          finance and incubation support for more than 60 innovations. GIAN West was the joint winner
          of the National Award for Technology Business Incubator in 2003, and one of the technologies
          it incubated—the cotton stripper machine—received an award.

          National Innovation Foundation (NIF). The work of the HBN and SRISTI has been the model
          for the NIF (, set up by DST with an initial grant of about $5 million. It is a for-
          mal effort to document grassroots innovations and traditional knowledge, and has a repository

Promoting Inclusive Innovation

      Box 4.5     continued

      of more than 50,000 practices. It received a Micro Venture Innovation Fund (MVIF) of about
      $1 million with the help of SIDBI (Small Industries Development Bank of India), but so far it has
      disbursed only about $54,000. The MVIF has made availability of risk capital a bit easier, but
      there remains a gap with the lack of the establishment of a dedicated fund for product devel-
      opment. Of the tens of thousands of grassroots innovations and traditional knowledge prod-
      ucts scouted by NIF, few have been incubated. Ideally, NIF should plan to incubate at least
      2,000 projects to obtain 20–30 major products—of which 2 or 3 may achieve major success.

      Source: Mathur and Sinha 2006.

   Although there has been a lot of activity on grassroots innovations, there has not
been much assessment or quantification of how they have contributed to improving
the livelihoods of people in the informal sector. What little evaluation has been done
mostly lists activities and number of innovations. There is virtually no information
on costs or impacts of the innovations, though there have been many and some have
even been licensed in India and abroad. Conceptually there are some models for pro-
moting inclusive innovations (box 4.6).
   Grassroots innovations face five main challenges: high transaction costs of scout-
ing and documentation, need for value addition, need for commercialization, need
for finance, and unclear intellectual property rights (IPR). High transaction costs

      Box 4.6      Models for Promoting Inclusive Innovations

      • Grants can be provided for technical assistance to support scouting and documentation,
        value addition, prototype development, and diffusion.
      • For commercialization, government could provide matching grants. This could be part of the
        window of the fund of funds (see chapter 7), where the government can require certain
        activities (such as investing in pro-poor innovations, spin-offs from R&D labs, and so on) in
        exchange for the funding.
      • The government could also use procurement to promote inclusive innovations—for exam-
        ple, by specifying goods and services for the poor and encouraging competitive bidding to
        produce them, thereby generating a market.
      • Finally, Bottom of the Pyramid initiatives already under way should be encouraged to achieve
        the right scale.

      Source: Authors.

                                                                    Anuja Utz and Carl Dahlman
          are inevitable in programs that support a large number of widely scattered informal
          innovators who have accumulated knowledge from years of trial and error, or incre-
          mental innovations in existing tools or agricultural practices. What is needed is good
          monitoring and evaluation to support grassroots innovations considered to be mak-
          ing positive contributions by a new pilot-inclusive innovation fund.

          High Transaction Costs of Scouting and Documentation
          Possible remedies, relying mainly on existing networks, include the following:

          • Developing special campaigns through microcredit associations, innovator asso-
            ciations, and GIAN to scout traditional knowledge, pool best practices, and take
            products to the market

          • Using radio and other media to expand the reach of the HBN and institutional-
            izing Village Knowledge Registers (such as plant breeders’ rights) that would not
            be restricted to biodiversity knowledge

          • Replicating the Shodh Yatras, Shodh Sankals, and Prayog Pariwar networks
            throughout the country

          • Building more multimedia, multilanguage databases (like that developed by
            SRISTI; see box 4.5) on innovations and traditional knowledge in local languages.

          Need for Value Addition
          Most grassroots innovations are still at an early stage of indicating that something
          might work (such as in herbal medicine) or a minor improvement might emerge—
          both of which require much more analysis and testing to improve the value of the
          innovations. However, there are few facilities or labs to do such analysis, validation,
          and testing.4 Even where available, they are most likely beyond the financial means of
          grassroots innovators. Furthermore, as with most innovations, there is a need not
          only to make technical improvements, but also to do demonstrations and test mar-
          keting to evaluate the market potential of the innovations, which requires additional
          steps and resources and can be expensive. What is needed is the following:
          • Develop a nationwide strategic plan to add value in local knowledge, innovations,
            and practices through contractual arrangements with public and private R&D
            institutions. This includes support for SRISTI’s think tank—the Academy for
            Augmenting Sustainable Technological Inventions, Innovations, and Traditional

          • Establish community farms where traditional knowledge holders can do experi-
            ments and demonstrate their technologies.

          • Build national and regional technology networks for specific problems. Invest-
            ments are needed to identify experts willing to offer their services at different
            terms (ranging from voluntary to deferred or upfront payments). Incentives must
            be created for their time-bound availability at the sites of innovators.

Promoting Inclusive Innovation
• Use ICT to facilitate communication among network members. A revamped por-
  tal like can provide an online value addition and incu-
  bation platform.
• Develop common fabrication laboratories and testing centers for faster validation.
• Link up with the 100,000 Internet-enabled Common Services Centers being set
  up by the Department of Information Technology to extend the reach of grass-
  roots innovations.

Need for More Effective Commercialization
Two types of diffusion and dissemination efforts are required for commercialization.
Most innovations are simple and low cost (such as a pulley that locks a rope in place
so that the object does not slide back, or a simple agricultural tool), and take the
drudgery out of some work. The cost of diffusing such products is often higher than
the cost of the product itself. But because they are simple, low cost, and easy to repli-
cate, such products can have large social impacts on the livelihoods and quality of life
of marginalized sections of society. Diffusion of these types of innovations requires
the following:
• Creating awareness of them through the media, and publicizing results of trials
  and demonstrations
• Networking with NGOs and other actors with outreach to communities, build-
  ing feedback loops for adoption
• Creating a national fund to acquire rights to such technologies
• Contributing resources to support diffusion of open source public domain tech-
  nologies (social technologies), governed by the prior informed consent (PIC) of
  the knowledge holders, communities, and individuals.
   Other types of innovations are more complex and expensive, but they can raise
productivity and increase competitiveness (such as a cotton-stripping motorcycle,
cycle-based plow, or bamboo-splitting machine). Diffusing these will require
explicit efforts to scale up for industrial production and significant marketing and
commercialization efforts. Such efforts will require developing technology clearing-
houses and exchanges to link grassroots innovators, investors, and entrepreneurs, as
well as incubators such as GIAN to do market research, develop business plans, and
source micro venture capital or risk capital to support innovators in becoming
entrepreneurs. This could lead to a global GIAN that provides incubation support
to people across the world.

Need for Financing Commercialization
Finally, even for innovations sufficiently developed to be commercialized, their
industrial production and distribution need financing. This can be more expensive
than the earlier stages, and it is difficult for grassroots innovators to get financing for
this step (see chapter 7). Recommendations include establishing a fund for new

                                                                     Anuja Utz and Carl Dahlman
          grassroots products and processes ready for commercialization, the terms of which
          could be softer than regular commercial financing. It is important that grassroots
          innovators learn about commercial principles. It is also important to learn from
          e-Choupal,, and other initiatives on sharing information among
          potential private investors to set up venture funds or extend credit facilities for such
          commercialization (see box 4.3).

          Pro-Poor Intellectual Property Rights
          How can India deliver the benefits of IPR to poor citizens living traditional
          lifestyles? Any attempt to craft a traditional knowledge IPR framework that rewards
          functional knowledge from traditional communities will require revolutionary
          thinking and bold experimentation in both legislation and administration. Advo-
          cates of traditional knowledge are often split between their desire to protect secret
          knowledge in ways that preserve traditional communities and their desire to lever-
          age that knowledge in ways that increase the resources and opportunities available
          to those communities. These goals, while both arguably worthy, are mutually exclu-
          sive. A pragmatic consideration suggests that preservation is unlikely to succeed.
          Commercially valuable secrets are notoriously difficult to preserve. Corporations
          that have done so successfully have developed complex, often expensive, proce-
          dures. Nothing comparable is possible at the level of traditional knowledge. If India
          wants to lead the world in addressing the intellectual property inherent in tradi-
          tional knowledge, it must begin by explicitly adopting the goal of compensation.
              IPR for traditional knowledge could offer solutions—and challenges. Professor
          Anil Gupta, the Executive Vice Chairperson of India’s National Innovation Founda-
          tion (NIF), has clearly articulated the challenge of protecting functional IPR for tra-
          ditional knowledge (Gupta 2002). Introducing new IPR for traditional knowledge
          will both impose immediate administrative costs and increase restrictions on the use
          of such knowledge. Thus, a proper analysis of such IPR must justify the system as gen-
          erating internal benefits that exceed its costs. Neither India nor the world should
          reward possessors of functional traditional knowledge merely for possessing it—but
          they should reward those possessors for sharing their knowledge. The basis for the
          proposed IPR system for traditional knowledge must thus parallel the basis of the
          patent system: possessors of traditional knowledge must put their knowledge into full
          public view in exchange for temporary rights, revenues, or both. When that tempo-
          rary period ends, the traditional knowledge will become part of the global knowledge
          base, freely appropriable by anyone who grasps it—and no longer subject to anyone’s
          IPR. Box 4.7 examines possible system structures for traditional knowledge IPR.
              Consideration should be given to creating an IPR policy think tank. The govern-
          ment of India should charge the proposed policy-oriented think tank with assessing
          the costs and benefits associated with individual IPR for traditional knowledge, a
          blanket TKDL license, and a voluntary fund. Adoption of any of these approaches,
          concurrent with or shortly after the launch of the TKDL, will establish India’s
          leadership on this issue, and reinforce its image as a country taking bold, novel
          approaches to developing its innovation system, and its burgeoning role as a leading
Promoting Inclusive Innovation

      Box 4.7     Approaches to Designing Intellectual Property Rights for
                  Traditional Knowledge

      Possibility 1. Develop a direct national traditional knowledge analog to the patent system. This
      “equitable” proposal places possessors of traditional and nontraditional knowledge on footings
      as equal as possible. This proposal raises many challenges, including establishing rules for pub-
      lishing traditional knowledge to share knowledge with the world, circumscribing classes of
      ideas that qualify as traditional knowledge, defining “items” of traditional knowledge, deter-
      mining an appropriate length for IPR for traditional knowledge (beyond which the published
      knowledge enters the public domain), identifying “owners” for each item of traditional knowl-
      edge, setting and publishing “reasonable and nondiscriminatory” licensing terms (including
      both prices and rights), designating conservators, specifying appropriate outlays for moneys col-
      lected, designating enforcers, and defining penalties for noncompliance or infringement, and
      drafting international cooperation treaties in the likely event of noncompliant multinational cor-
      porations (MNCs). A variant is an international direct traditional knowledge analog to the patent
      system. This proposal eases many coordination problems, but risks holding the entire venture
      hostage to international intransigence.

      Possibility 2. Institute a blanket license for traditional knowledge IPR. This reduces the com-
      plexity of systemic administration and eliminates many direct incentives for innovation, but it may
      leave enough to spur volunteer or NGO efforts on collection and cataloging. However, it does not
      really address challenges in international coordination, enforcement, and distribution.

      Possibility 3. Establish a voluntary fund and encourage MNCs to contribute funds related to
      the value that they extract from the TKDL. This raises standard problems of free-ridership and
      the general limitations of applying moral suasion to business decisions. It is easier to establish
      and begin quickly, and could lead to larger short-term pools of disbursable money than the
      other alternatives. It is likely to present the fewest problems of international coordination and

      Source: Abramson 2007.

player in the global knowledge economy. Recommendations here include complet-
ing work on the library to prevent international patenting of traditional knowledge,
and soliciting further analyses of various approaches toward leveraging traditional
knowledge into revenue streams.

Helping the Informal Sector Better Absorb Knowledge

A third approach to promoting inclusive innovation is for India to help informal
enterprises better absorb existing knowledge. A main recommendation of this sec-
tion is for government programs to more effectively promote knowledge absorption
in the productive sector and extend the reach of markets to the common man.
                                                                   Anuja Utz and Carl Dahlman
          Agricultural and Rural Extension Reforms Offer Examples

          Traditional, supply-driven public extension systems in agriculture have been
          replaced by more flexible, market-sensitive support mechanisms. The green revolu-
          tion in India was successful in increasing agricultural output, but by the 1990s the
          increased supply of wheat and rice had reduced commodity prices and farm
          incomes, and India’s supply-driven extension system could no longer respond effec-
          tively to new challenges in agriculture. India’s traditional training and visitation
          extension system stopped being effective at roughly the time the country achieved
          food security. The system worked well when relatively uniform technological pack-
          ages had to be diffused rapidly to large numbers of producers in a short time, as
          with improved rice production technologies for irrigation farming. But the
          approach was abandoned with changing needs, given its inadequate interaction
          with the agricultural research system, inability to attribute benefits, weak account-
          ability, and lack of fiscal sustainability (see Anderson, Feder, and Ganguly 2005).
          There is a growing realization that a rural development strategy is needed to focus
          on increasing farm incomes and rural nonfarm employment. China’s successful
          program for developing rural nonfarm opportunities is premised on providing a
          flexible, demand-driven package of services—not just technology, but also infor-
          mation, technical assistance, marketing, and developing supply networks and sup-
          ply chains (box 4.8).
              The recent National Agricultural Technology Project has piloted a more market-
          oriented extension approach built around demand-driven market assessments,
          farmer organizations, and bottom-up governance. In particular, the extension com-
          ponent has successfully piloted farmer-centered, market-driven extension services
          with close links to researchers and farmers known as Agriculture Technology Man-
          agement Agencies (ATMAs). ATMAs improve coordination among line depart-
          ments, encourage public-private partnerships for technology testing and extension,
          and strengthen institutions for monitoring and evaluation at the state and national
          levels (box 4.9).

          Extending Support to Markets and Networks at the Cluster Level

          Support networks can help low-income workers raise productivity and incomes by
          teaching more efficient production methods. Informal enterprise, formal micro
          enterprise, and SME production chains of goods and services suffer from low-quality
          inputs, stock seasonality and accumulation, weak capital machinery, unavailability of
          prototyping and facilities for experimentation, lack of information on and exchange
          with markets—including for exports—and poor knowledge of how to manufacture
          goods. An illustration is provided by the plethora of roadside motor mechanic shops
          all over India. Millions of mechanics do all kinds of repairing, and their problem-
          solving abilities and novel solutions show that their talents can be harnessed to
          increase productivity and achieve business ends. However, most mechanics lack
          basic education and have no access to formal engineering or science training.
Promoting Inclusive Innovation

      Box 4.8      China’s Spark Program

      With the emergence of rapidly growing, dynamic rural nonstate enterprises in the early 1980s,
      and with the Chinese government’s determination to be more active in using science and tech-
      nology developed in China in the real sector, in 1986 the Ministry of Science and Technology ini-
      tiated the nationwide Spark Program. (Its name came from the Chinese proverb “A single spark
      can start a prairie fire,” meaning that the spark of science and technology will extend over the
      vast rural areas of China.) Its overall objective was to help transfer technological and manage-
      rial knowledge from more advanced sectors to rural enterprises to support continued growth
      and development in nonstate rural enterprises—mostly town and village enterprises (TVEs)—
      and to help increase output and employment.
          The program has spread to virtually every province in the country and has helped develop
      66,700 projects and many more individual enterprises within them. As a result, some 20 million
      people have found employment in rural areas. Due to a TVE in Jingyang County in Shaanxi, per
      capita income in the county has almost tripled in five years. The Spark Program has achieved one
      of the primary objectives of China’s agricultural policy: to stimulate and modernize the rural econ-
      omy and improve the living standards of farmers and their families. Many factors have con-
      tributed to the program’s success, such as the following:

      • Flexibility. Farmers can select from a wide range of well-developed technologies (projects)
        to suit their districts.
      • Demand driven. Participants choose from the projects within the program.
      • Income driven. Joining the program provides the prospect of higher income.
      • Diffusion of known knowledge. Technologies used in the program are generally already
      • Local accountability. Selection of the leader of a Spark Program project is in the hands of par-
        ticipants (subject to approval).
      • Support from local institutes. The state provides financial support for training participants and
        for technical advice.
      • Sustainability. Enterprises are funded almost entirely from bank loans and from capital raised
        by participants, not from government grants.
      • Market responsiveness. Considerable effort is made to ensure that market outlets are avail-
        able for the products of participating enterprises, with the program linked to local agricultural
        and industrial market systems.

         One of Spark’s main lessons is that successful execution of technical assistance requires full
      commitment and participation by all stakeholders. National ownership is important, and sound
      organizational setup and dynamic leadership for implementation are essential to project

      Sources: World Bank 1998; Huang and others 2004; IDRC ( /en/ev-55213-201-1-DO_TOPIC.html).

                                                                                      Anuja Utz and Carl Dahlman

          Box 4.9      The Experiences of Agriculture Technology Management Agencies

          India’s ATMAs provide for decentralized, participatory, farmer-driven extension services and
          have institutionalized bottom-up planning processes through the preparation of Strategic
          Research and Extension Plans—based on participatory rural appraisals and Block Action Plans.
          The program relies on a group approach based on village groups, as well as training of volun-
          teer farmers. ATMAs support private extension initiatives by contracting NGOs to conduct
          extension responsibilities in selected areas, using farmer-to-farmer extension services provided
          by individuals or through farmer organizations, and forming partnerships with input providers (of
          seeds, fertilizers, crop protection chemicals) for demonstrations and farmer training. In most
          districts, farmers and other stakeholders have a sense of program ownership.
              ATMA successes include diversification of production systems for higher income (for exam-
          ple, cultivation of high-value crops including flowers, fruits, vegetables, and medicinal plants),
          better natural resource management, integrated pest management, organic farming, well
          recharging, integrated plant nutrient management, resource conservation technologies, and
          development of new enterprises such as cashew processing, beekeeping, dairying, value addi-
          tion through processing, and group marketing. Farmer interest groups have mobilized men,
          women, and young people to join common interest groups, such as producer groups for flow-
          ers, fruit, milk, and other products, as well as marketing groups for seed.
              Training farm leaders in technology and leadership skills is important. Strong farmer organi-
          zations can be a positive link in the cost-effective provision of extension support to small and
          marginal farming communities, as well as an alternative to privatization of extension service.
          Farmer Advisory Committees are operational in most project blocks and are recognized by gov-
          ernment line departments. However, internal conflicts between ATMA priorities and depart-
          mental responsibilities persist, and extension staff require considerable motivation to work in a
          farm advisory role with multiple funding sources.

          Source: Janssen 2006.

                            Creating a network of such entrepreneurs and giving them better access to modern
                            training, knowledge, quality assurance, and quality control training and finance
                            could lead to them providing high value to customers—increasing productivity as
                            well as incomes (Banerjee 2006).
                                A broad range of support networks have unrealized synergies, including
                            research firms, enterprises, trade-entrepreneur networks, and NGOs. Formal
                            researcher-academic networks typically do not have enough incentives to provide
                            knowledge inputs to this bottom layer of producers. However, CSIR is building
                            new innovation models by forging local partnerships, reaching out to the remote
                            corners of India. A village called Athaoni, on the border of Maharashtra and Kar-
                            nataka, is where Kolhapuri chappals (sandals) were until recently made using tra-
                            ditional techniques. Scientists from the Central Leather Research Institute helped
                            reduce the processing time of producing the sandals—the stamping process was
                            standardized and certain innovative changes were made in the design, based on
Promoting Inclusive Innovation
computer-aided techniques. But this was not a top-down process. The oldest man
in the village was consulted, and today the institute has trained several hundred
artisans—not only enhancing family incomes but also changing their perceptions
of science and development.
   Large enterprises may be encouraged to act as mentors for SMEs. The Tata Group
may be interested in leveraging value addition through maintenance clinics. Upgrad-
ing roadside mechanic shops through access to more modern knowledge and
practices could help them become part of this chain. Trader-entrepreneur networks
are also important, including traders and wholesalers up to exporters, master-
craftsperson traders, and guild masters. Recognition is needed for their roles in min-
imizing transaction costs, channeling market information, enabling informal con-
tracting and close monitoring of least costs, providing finance, and providing
designs and inputs, and sometimes even skilled staff. Among the clear advantages of
producer cooperatives, professional organizations, and other NGOs is that they have
lower direct personnel and infrastructure costs than do formal organizations carry-
ing out similar functions. More important, they often have or can create or access
informal networks that can facilitate their work—and their impact can be significant
(box 4.10). The government as well as the private sector would do well to learn from
their experience.

      Box 4.10     NGO Initiatives and Rural Networks

      Self-Employed Women’s Association (SEWA). The association is engaged in manufacturing,
      crafts, and services, and has more than 420,000 members at the grassroots level. Export mar-
      kets explored include Australia, Belgium, France, Germany, Italy, Japan, Spain, the United Kingdom,
      and the United States. SEWA’s Trade Facilitation Center researches markets, improves com-
      munications between micro enterprises and their federations, carries out capacity-building and
      product development, and develops information and training software in local languages. It has
      commercialized the rural handicrafts industry, which sells women’s goods through shops, trade
      fairs, and exports—in some cases adding $175 to an embroiderer’s annual income. Key results
      for the Trade Facilitation Center include $307,000 in sales in 2006, a reduction in rejection rates
      from 30 percent to less than 9 percent, a state-of-the-art mainline production facility, and
      income generation for over 1,100 craftswomen in 2005 and 2006.

      Krishi Gram Vikas Kendra (KGVK). The organization has pioneered the concept of “total
      village management” by providing sustainable income-generating opportunities and access to
      health care for the rural poor of Jharkhand, where 60 percent of the population lives below the
      poverty line. One example is its AGIVIKA (livelihood) research and training center, which builds
      skills and production capacity among the rural poor by training them to deliver services in pri-
      mary health care, education, and water management for a small fee. In the past 33 years, KGVK
      has helped increase incomes of more than 10,000 people, and created over 3,000 self-help

                                                                                          Anuja Utz and Carl Dahlman

          Box 4.10      continued

          groups in 352 villages of rural Jharkhand. Key results include the formation of 78 farmer clubs
          that provide training and extension services to over 600 farmers, and two retail shops that
          have had over $12,000 in sales.

          Magan Sanghralaya and Centre of Science for Villages (CSV), Wardha, Maharashtra.
          Magan Sanghralaya is the apex body of the CSV. CSV’s objective is to identify technological
          problems in rural areas, find suitable interventions to mitigate them, and develop the mitigations
          in ways that can be adapted locally. It trains rural women in simple scientific skills and tech-
          niques, teaching marketing skills on how to sell, display, and store finished products. The cen-
          ter has helped develop 300 technologies for women, benefiting some 2 million women.

          Prayog Pariwar. The essence of the Prayog Pariwar movement is regular meetings of farmers’
          groups to discuss practical problems and provide them with information on scientific practices.
          A key accomplishment is its efforts in carrying out the Scientific Grape Revolution in Maha-
          rashtra, involving thousands of farmers. Within 20 years, farmers with little experience in sci-
          entific farming are now believed to be India’s leading grape cultivators, with annual turnover of
          nearly Rs 500 crore (about $122 million).
          Sources: SEWA:, Treacy 2003, and; KGVK:; Magan Sanghralaya
          and CSV, Wardha, Maharashtra: Dabholkar at

                                The government should consider providing additional programmatic support to
                            markets and networks at the cluster level—with a focus on helping informal enter-
                            prises better absorb knowledge. The development of linkages calls for the emergence
                            of new partnerships among traditional knowledge systems, NGOs, user ministries,
                            associations of village industries, panchayat raj institutions, and rural Indians. A
                            number of initiatives have elements of such partnerships. For example, it would be
                            important to monitor ATMAs in agriculture and, if effective, expand them by pro-
                            viding increased funding. There is also a need to enhance absorptive capacity and
                            extend the reach of markets to the poor through enhanced information, education,
                            training, skills development, and finance. It is also important to strengthen indige-
                            nous clusters supported by trader-entrepreneurs, corporate parenting, and NGO
                            networks. In the long run, developing a more formal programmatic approach would
                            be helpful to serve as a focal point, provide funding as a stimulus, and ensure rigor-
                            ous monitoring and evaluation of results.
                                Socially driven pro-poor innovations should also be encouraged. This is
                            where companies go beyond the pure profit motive to develop goods or services
                            to help deal with the needs of the poor, such as basic literacy, preventive medi-
                            cine, and health-related issues, in the spirit of corporate social responsibility
                            (box 4.11).
Promoting Inclusive Innovation

      Box 4.11     Indian Initiatives for Corporate Social Responsibility

      Education. The Computer-Based Functional Literacy (CBFL) Program (
      tries to overcome illiteracy through the innovative use of information technology. It uses a
      mix of teaching software, multimedia presentations, and printed materials to teach unedu-
      cated people to read in a fraction of the time it takes to do so using conventional means.
      The project focuses exclusively on reading; people in the program can acquire a 300–500
      word vocabulary in their own language within 30–45 hours spread over 10–12 weeks. The
      Infosys Foundation ( has set up more than
      10,150 libraries in rural schools, as well as well-equipped libraries in Hubli and Bangalore with
      the latest books in high-tech streams—such as medicine and engineering—that can be accessed
      by underprivileged students. It has also collaborated with the Center for Environment Edu-
      cation, Bangalore, to train teachers in science and the environment; 15 camps have been
      held in the 2004–06 period, and 1,000 teachers trained. The Azim Premji Foundation (www. is dedicated to universalizing primary education in India. It works
      under a Learning Guarantee Program, building a voluntary spirit of accountability among schools,
      communities, and government functionaries, and studies factors that influence learning. The
      Byrraju Foundation of Satyam Computer Service broadcasts English and math classes through
      satellite links and radio towers to more than 200 government-run schools (Corcoran 2006).
      With IBM’s help, it has put computers in 54 rural primary schools and supports vocational pro-
      grams for plumbers, electricians, and dressmakers. NIIT’s Hole in the Wall experiment started
      in 1999 by introducing a kiosk housing a high-speed, touch-screen computer in a wall in a New
      Delhi slum, and showed that children can master navigating the Internet within hours (Orvis
      2006). Since then, more than 150 computers have been installed in some 50 locations in New
      Delhi slums and rural India. TARAhaat ( is a franchise network of 37 ICT
      centers that provide e-education, communication, and governance services to the poor. They
      also sell innovative products such as fuel-efficient cook stoves, lighting systems, and solar
      power devices.

      Health and preventive medicine. Distance Healthcare Advancement is an initiative of Philips
      India to deliver high-quality, low-cost diagnostic distance health care for the underserved
      ( It partners with Apollo hos-
      pitals, which provides doctors and specialists for free consultations; the Electronics Corporation
      of India (a government organization that supplies the satellite dish); and with ISRO (Indian Space
      Research Organization), which places the satellite in orbit.

      Linking farmers and the rural population through information technology. Indian Tobacco
      Company’s e-Choupal ( is the largest infrastructure network serving villages,
      farmers, and rural markets, reaching more than 3.5 million farmers in over 31,000 villages through
      6,000 kiosks in at least six states. Village Internet kiosks managed by farmers enable the agricul-
      tural community to access information in their local languages on the weather and market prices,
      disseminate knowledge on scientific farm practices and risk management, facilitate the sale of
      farm inputs, and sell farm produce from the farmers’ doorsteps. Real-time information enhances

                                                                                                  Anuja Utz and Carl Dahlman

          Box 4.11       continued

          farmers’ ability to make decisions and aligns their farm output with market demand and secure
          quality and productivity. Aggregation of demand for farm inputs gives them access to high-quality
          inputs from established manufacturers at fair prices. As a direct marketing channel, e-Choupal
          eliminates wasteful intermediation, significantly reducing transaction costs (Das Gupta 2006).
          Microsoft’s Rural IT Initiative, Saksham (, is aimed
          at delivering the benefits of IT to rural India. It will partner with Drishtee, Jai Kisan, and n-Logue to
          roll out kiosks across the country: 50,000 are planned over the next three years. And the Byrraju
          Foundation has created two IT centers (known as GramIT), with 100 kiosks each in Andhra
          Pradesh. The foundation covered the initial costs: $110,000 for computers, wireless networks,
          and worker training. GramIT withholds some wages for the 1 percent equity that each worker will
          hold in the local business in two years. It is estimated that each job generates as much revenue
          as five acres of good land (Corcoran 2006).

          Creating opportunities by starting new businesses ( The Bharatiya Yuva
          Shakti Trust (BYST) identifies underprivileged young entrepreneurs and provides them with
          collateral-free financing over three years. Funding is supplemented by targeted mentoring, mon-
          itoring, and networking. BYST has engaged with the Indian corporate sector. Its Mentor Devel-
          opment Program will expand its mentor network to 30,000 over the next five years, affecting
          90,000 enterprises run by young entrepreneurs in India.5

          Source: Authors, based on cited Web sites.


                             For questions or further information, please contact Anuja Utz at or Carl
                             Dahlman at

                             1. Such a foundation, the Foundation for Innovation, Research, Support Trial, and Diffusion
                                (FirstD), was discussed during the preparation of the 11th Five-Year Plan for CSIR, according to
                                a communication by Professor Anil Gupta (personal communication July 2006).
                             2. Karnani (2006) presents a complementary view on how the private sector can help alleviate
                                poverty. Rather than focusing on the poor as consumers, they should be viewed as producers—
                                thereby emphasizing buying from rather than only selling to the poor.
                             3. Much of the discussion in this section draws on Mathur and Sinha (2006).
                             4. CSIR is encouraging links between scientists and indigenous knowledge holders. An example is a
                                medicine based on the active ingredient in a plant, Trichopus zeylanicus, found in the tropical
                                forests of southwest India and collected by the Kani tribe. Scientists at the Tropical Botanic Gar-
                                den and Research Institute (TBGRI) collected plant samples, tested the ingredients, and incorpo-
                                rated them into a compound christened Jeevani—giver of life. The tonic is being manufactured
                                by an Ayurvedic drug company. In 1995 an agreement was signed between TBGRI and the tribe
                                to share a license fee and assign 2 percent of net profits to the tribe. This process was perhaps the
                                first time that cash benefits have gone to the source of knowledge of traditional medicines—the
                                original innovators (Mashelkar 2001).
Promoting Inclusive Innovation
5. Since its inception, BYST has established a network of 3,000 volunteer business mentors and
   developed more than 1,100 enterprises. Key results over the past 13 years include creation of
   10,000 new jobs, 10-fold wealth generation (Rs 10 in enterprise revenue for every Rs 1 invested),
   counseling of 55,000 young entrepreneurs, 1,000 new jobs a year created by overseas organizations
   mentored by BYST, and a loan recovery rate of 95 percent (on total loans of $750,000). Informa-
   tion is from


Abramson, Bruce. 2007. “India’s Journey toward an Effective Patent System.” Policy Research
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Anderson, J. R., G. Feder, and S. Ganguly. 2005. The Rise and Fall of Training and Visit Exten-
  sion: An Asian Mini-drama with an African Epilogue. Washington, DC: World Bank.
Banerjee, Parthasarathi. 2006. “Innovation in Informal, Small and Tiny Industries.” Back-
   ground paper commissioned by South Asia Finance and Private Sector Development,
   World Bank, Washington, DC.
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